Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“ The reality is that Shiller’s research does not permit us to predict the future, it permits us to see the present more clearly. ”
But you said Shiller’s research tells us that there will be a stock market crash. Isn’t that predicting the future?
Say that someone learns how to drive a car and determines for himself that going at a speed of 60 miles per hour suits him. Then one day there is ice on the road. He wonders if perhaps he should lower his speed. He consults one friend who is a believer in the Buy-and-Hold approach to car driving. This friend says: “Oh, you must continue driving 60 miles per hour on the ice. We have no way of knowing precisely when you will crash. We of course know that sooner or later you WILL crash. But that’s irrelevant. The important thing is that we cannot say precisely when you will crash. So you just must continue driving at what is now an insanely risky speed until you actually do crash and possibly kill yourself.” If he has a more sensible friend who advises him to drive at a lower speed when there is ice on the road, the Buy-and-Hold friend threatens to kill the sensible friend because he knows that, if sensible advice can be heard, he will no longer be perceived as an “expert” on car driving.
The market is always going to get prices right sooner or later. That is what markets do. A CAPE of 17 is a long ways down from a CAPE of 38. So it is insanely dangerous for an investor to be going with the same stock allocation today that made sense when the CAPE was 17. But, no, no one can predict effectively when the price crash will come. The Buy-and-Holders conclude that no one should tell investors about the insane level of risk that they are taking on by continuing with their old stock allocation. I say that we should permit honest posting and let each investor decide for himself or herself what to do with his or her retirement money. The Buy-and-Holders should not be permitted to employ criminal tactics to silence voices who believe that Shiller’s Nobel-prize-winning research is legitimate research. To permit that would be to invite catastrophe when the inevitable price crash arrives.
That’s my sincere take, Anonymous. My best and warmest wishes to you and yours regardless of what investment strategy you elect to pursue.
Rob
How many death threats have you received? When was the last one? Where is the evidence? What other criminal activities have occurred and where is the proof?
The death threats are only one of many types of intimidation tactics that have been employed by you Goons, Anonymous. We have seen demands for unjustified board bannings. We have seens thousands of acts of defamation. We have seen acts of extortion aimed at silencing academic researchers who dared to “cross” the Buy-and-Holders by publishing honest research. And on and on.
The proof is that the error in Greaney retirement study has not been corrected to this day. People use retirement studies to plan retirements. The normal thing would be for the author of a retirement study that was found to be in error to correct the study within 24 hours of the moment that an error in it was brought to his attention. For Greaney, that was on the morning of May 13, 2002. And the second normal thing would be, in the event that the author of a retirement study found to be in error failed to correct his study within 24 hours, every responsible person who learned of the matter would insist that he do so. Motley Fool should not have banned me, it should have banned Greaney. It’s the same with Morningstar. And with the Early Retirement Forum. And with the Get Rich Slowly blog. And on and on and on and on.
It does not take 19 years to determine whether or not a retirement study contains an adjustment for the valuation level that applies on the day the retirement begins. It shouldn’t take more than 19 minutes.
If there haven’t been criminal acts of intimidation, including death threats and lots of other nasty stuff, how could it be that the Greaney retirement study has gone uncorrected for 19 years? Even Evidence-Based Investing, one of the generals in Greaney’s Goon army, now acknowledges that the study lacks a valuation adjustment. But he offers no explanation of why the study has not been corrected. That ain’t normal, Anonymous. The only possible explanation is a mountain of intimidation tactics.
I wouldn’t have believed what we have seen if you had told me on the morning of May 13, 2002. I expected Greaney to react to my post in an abusive manner. But I believed that he would be reined in within two or three days. No one could have anticipated what we have seen. But here we are. Now we have to cover up not only the error in the study and the error in the Buy-and-Hold Model that caused Greaney to make the error in the study and the errors in all the other Buy-and-Hold retirement studies but also the intimidation tactics, including death threats, that we employed to keep more people from learning about the error in the study and insisting that it be corrected.
Not this boy, you know? The normal and healthy thing would have been for a national debate on the far-reaching implications of Shiller’s Nobel-prize-winning research to have been launched in 1981, when the research was published. I believe that the advance achieved by Shiller was so huge that many suffered cognitive dissonance and failed to incorporate Shiller’s findings in their understanding of how stock investing works. Then, when something came up showing the dangers of Buy-and-Hold, they went into cover-up mode. Today we are dealing with the cover-up of a cover-up of a cover-up of a cover-up.
It’s not a healthy situation. If stocks continue to perform in the future anything at all as they always have in the past, we will see in not too long a time an economic crisis that will do great harm to millions of people. Harm that would have been avoided if we had launched that national debate in 1981 or even in 2002. I say that we need to launch the long-deferred national debate by the open of business on Friday morning, if not sooner. That is my sincere take. I think this 40-year cover-up is killing us, you Goons as much as the rest of us.
We are all in this together. We all need to know how stock investing works in the real world. We should all be doing everything in our power to see that we all enjoy an amazing learning experience together. Or so this trouble-making Rob Bennett fellow sincerely believes.
I think that I did a good thing when I worked up the courage to go public re the error in the Greaney retirement study. I see it as my finest moment. I showed in that moment beyond any doubt whatsoever that I was Greaney’s friend. The normal reaction of someone who learns that he has made an error in a retirement study is to THANK the person who brought the error to his attention and thereby spared him further embarrassment.
That’s my sincere take re these terribly important matters, in any event.
My best and warmest wishes to you and yours.
Rob